Health and Healthcare Systems

What would Roosevelt do? How the US should respond to COVID-19

A U.S. flag flies over a former motel that was bought by King County as a coronavirus quarantine facility, and reportedly where the first person using the facility left without permission, in Kent, Washington, U.S., March 13, 2020.

Motels, such as this have become coronavirus quarantine facilities. Image: REUTERS/Brian Snyder

Our Impact
What's the World Economic Forum doing to accelerate action on Health and Healthcare Systems?
The Big Picture
Explore and monitor how United States is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:

United States

  • In the United States, more than 50% of jobs are at risk from layoffs, furloughs, reduced pay, and lost hours due to the coronavirus pandemic.
  • It needs to mobilize its resources, support its home workers and provide emergency cash services for those in need, writes economist Pavlina Tcherneva.

The fallout from the coronavirus pandemic will be nothing like that of the 2008 financial crisis, nor will a V-shaped recovery be achieved through conventional stimulus – not even through truly massive conventional stimulus. We are at war with COVID-19, and in wartime, civilian production grinds to a halt and the only work that is needed is for the war effort itself.

Moreover, a recession is sadly necessary to stop the spread of this virus. In the United States, over 50% of jobs are at risk from layoffs, furloughs, reduced pay, and lost hours. Virtually every sector of the economy stands to lose a large chunk of its business, household incomes will be devastated, and spending by consumers and firms will rapidly decline. The manufacturing collapse has already begun; the service economy, which employs 80% of all workers, will be next.

Coronavirus Covid-19 virus infection China Hubei Wuhan contagion spread economics dow jones S&P 500 stock market crash 1929 depression great recession
An chart the decline of Business activity in New York State after the pandemic began. Image: Federal Reserve Bank of New York

One pandemic thus will lead to another – of unemployment. The avalanche of layoffs will bring a wave of defaults, bankruptcies, and depressed profits. The domino effect will continue across many domains, from collapsing state and municipal tax revenues and business failures to impoverished communities, declining health outcomes, homelessness, and “deaths of despair.”

How should governments respond? The same way the US government did under President Franklin D. Roosevelt in the World War II era.

The first priority is to mobilize. That means building temporary field hospitals, drive-through clinics, and emergency health centers. It means cranking up production of essential equipment and medication, staffing health facilities adequately, and establishing support services for the hungry, homeless, and most vulnerable. And it means deploying an army to disinfect airports, schools, and critical public places.

Second, we need to make it easier for people to stay home, such as by implementing short-term debt deferments (including on small business and mortgage loans) and suspending utility bills, as some European countries are already doing. Governments also should be providing income support in the form of extended unemployment insurance, food stamps, and housing benefits. In the US, all work requirements for public benefits should be abolished, and the federal government should extend immediate financial assistance to state governments constrained by balanced-budget laws.

The coronavirus-response package recently adopted by the US does not go nearly far enough. As it stands, the legislation still would leave 80% of private-sector workers without medical and paid-leave coverage. The provision for free testing offers no solace to those who are already critically ill, or who will have lost their health insurance as a result of unemployment. The US should use this occasion to make universal paid leave and Medicare for all permanent policies.

Another top priority is to provide emergency cash support to households. Talk of a universal $1,000 disbursement has gotten Americans excited – $2,000 would be better. But cash assistance alone will not be enough. On the contrary, without the aforementioned provisions and bold measures to plug the hole in the cratering labor market, much of the cash payout will be wasted.

When employment and income prospects are uncertain, sending cash to families is like pouring water into a leaky bucket. What the US and other countries really need are policies to create good jobs once the crisis has passed.

That’s why, after taking all of the steps necessary for today, governments should mobilize again. Only big government, big public investments, and big public-employment programs will ensure a quick bounce back, rather than another protracted jobless recovery. In the last crisis, much of the stimulus fueled runaway inequality; this time needs to be different.

The situation demands not “nudges” or “incentives” but direct action on the model of the New Deal, the US Interstate Highway System, and the Apollo Program. Governments should use this crisis as an opportunity to launch a bold investment program for clean, green infrastructure, as envisioned in the Green New Deal. After all, another viral epidemic is inevitable, and the climate crisis demands FDR-like ambition and resolve.

Once the pandemic is behind us, we need to start hiring. Policymakers should already be preparing public-service and guaranteed-job programs for anyone who shows up at the unemployment office. And that job guarantee should be paired with training and education, to help workers qualify for better-paid private-sector employment when the economy recovers.

Until last month, commentators in the US were still talking about labor-market slack from the 2008 financial crisis, and despite historically low official unemployment numbers. How long will it take to return to current employment levels after a pandemic that knocks a significant portion of the economy offline?

Without direct, guaranteed employment, we are looking at decades of elevated unemployment. Alternatively, a person with a living-wage job can pay a mortgage, buy a plane ticket, and go to restaurants. An ample supply of good jobs for all who want them is the surest way to bring every sector of the economy back to full health.

But how will the government pay for it all? The same way it pays for everything else. It should not take a pandemic or a world war to remind citizens that the US government is self-financing. US public financial institutions – the Treasury and the US Federal Reserve – ensure that all government bills get paid, no questions asked.

All that is needed, then, is for Congress to appropriate the budget and design an effective policy for managing this crisis and those that will come after it. No one is calling for wealthy taxpayers or foreign lenders to “pay for” the response. That is not how a government that controls its own currency finances itself. So, let us stop asking the trivial question of how to pay for it. Finding the money is never the problem. The focus should be on creating good jobs for the unemployed.

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Health and Healthcare SystemsGlobal RisksGlobal Cooperation
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

More on Health and Healthcare Systems
See all

How clean energy solutions at home and in health facilities can greatly benefit child health

Kitty van der Heijden

June 21, 2024

About Us



Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum